how could the pension funds adjudicator get it so wrong

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N DYANI AND MO MHANGO PER / PELJ 2010(13)2 However, Murphy's interpretation differed from that of his successor as Adjudicator, Vuyani Ngalwana. Ngalwana, following the decision in Volks v Robinson, 6 held that a person who could have married a deceased pension member but chose not to, should not be accorded the rights of a spouse of a deceased member. In addition, he ruled that in order to qualify as a dependant, the surviving cohabitants were to prove that the deceased was the dominant financial provider in their relationship. 7 These conflicting interpretations created uncertainty in the law, and pension funds were unsure of whether to consider surviving cohabitants as dependants. Many pension funds either sought clarity from the Adjudicator or refused to consider surviving cohabitants as dependants on the authority of Volks and Van der Merwe v Central Retirement Annuity Fund. 8 In response to this uncertainty and calls from the industry and legal commentators 9 for the Adjudicator to clarify the legal position on cohabitees, the next Adjudicator Mamodupi Mohlala determined Hlathi v University of Fort Hare Retirement Fund. 10 She ruled that a cohabitant qualifies as a factual dependant under the Pension Funds Act provided it can be established (by the cohabitant) that he/she was in a permanent relationship of mutual dependency or interdependency, and shared a common household with the deceased member of the pension fund. The determination was welcomed because it clarified the law and took into account both Volks and the recent amendments to the Pension Funds Act. 11 A few months later, the same Adjudicator determined in Smith that the rules of the Eskom Fund unfairly discriminated on the basis of marital status through refusing to pay spouse's death benefits to the complaint because she was not married to the deceased. Furthermore, since no justification was provided by the Eskom Fund, the Adjudicator concluded that the rule unfairly breached the complainant's constitutional rights. 6 Volks v Robinson 2005 5 BCLR 446 (CC) – hereafter Volks. 7 Maritz v Absa Groep Pensioenfonds PFA/GA/1387/00/KM on refusing to grant benefits to surviving life partners or cohabitants on the basis of the precedent established in Van der Merwe v Central Retirement Annuity Fund 2005 5 BPLR 463 (PFA) and Smith para 13. See De Wilzem v South African Retirement Annuity Fund 2005 2 BPLR 180 (PFA), in which the Adjudicator first expressed the dominant-servient test. 8 2005 5 BPLR 463 (PFA). 9 Mhango 2008 SA Merc LJ 135 (calling on the then Adjudicator Mamodupi Mohlala to clarify the law in relation to the right of cohabitants to qualify as dependants under the Pension Funds Act). 10 2009 1 BPLR 46 (PFA) – hereafter Hlathi. 11 Nevondwe 2009 Insurance and Tax Journal. See Dyani Speculum Juris (forthcoming). 163/204
N DYANI AND MO MHANGO PER / PELJ 2010(13)2 It is important to note that with regard to the call by the Constitutional Court in Volks for Parliament to regulate cohabitation relationships, 12 the Department of Home Affairs recently issued a Draft Domestic Partnerships Bill 13 for public comment. 14 The long title of the Draft Bill states it is "to provide for the legal recognition of domestic partnerships; the enforcement of the legal consequences of domestic partnerships; and to provide for matters incidental thereto". This Draft Bill provides for both registered and unregistered partnerships and seeks to provide legal protection to both. Consequently, Clause 1 defines a 'domestic partnership' as a registered or unregistered domestic partnership between two persons who are eighteen years of age or older. This Draft Bill, if passed, will provide relief to parties in a cohabitation relationship. However, under the current legal regime cohabitants may be left destitute at the termination of the relationship regardless of the period of their relationship. In this note, we advance and discuss the three main areas in which Smith should be regarded as bad law. Firstly, Smith is inconsistent with the landmark ruling in Volks. Secondly, the Adjudicator ought to have remanded the matter in Smith to the Board and ordered it to re-examine its discretion with a focus on a set of factors. Thirdly, we outline some of the negative effects of Smith on the pension funds industry. 2 Background of Smith v Eskom Pension and Provident Fund 12 Volks para 67, 119, 131–143, 239–241. 13 Domestic Partnerships Bill (draft), Notice 36 of 2008, Government Gazette 30663, 14 January 2008. Originally domestic partnerships were included in the Civil Union Bill 2006, which was adopted as a result of the Constitutional Court decision in Minister of Home Affairs v Fourie; Lesbian and Gay Equality Project v Minister of Home Affairs 2006 3 BCLR 355; 2006 1 SA 524 (CC); hereafter Fourie and Lesbian and Gay Equality Project). The Civil Union Bill had two aims: first, to provide same-sex couples with access to a "marriage-like institution" called "civil partnerships"; and second, to extend some financial protection to same-sex and opposite sex couples, called domestic partnerships. However, because of the pressures of a deadline granted by the Constitutional Court, the final version of the Bill, passed as the Civil Union Act 17 of 2006, omitted all provisions dealing with domestic partnerships. For further discussions on domestic partnerships, see Clark and Goldblatt "Gender and Family Law" 195. For criticism of the Civil Union Act, see Bonthuys 2008 SALJ 473; 2008 Sexualities 726. 14 The due date for comment was 15 February 2008. The draft Bill has yet to be tabled in Parliament. 164/204
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